The yen rebounded from recent lows against the euro and dollar in Asian trade on Friday after the Bank of Japan's latest monetary easing measures came in line with expectations.
Traders were also concerned after the Republicans scrapped a vote on a "Plan B" to avert the fiscal cliff, saying they would not return to the negotiating table until after Christmas, further delaying already bogged-down talks.
The unit tumbled this week after a landslide victory for the opposition Liberal Democratic Party led by Shinzo Abe, who had promised to press the central bank to take more aggressive action to boost the limp economy.
On Thursday, the BoJ expanded an asset-buying programme -- its main policy tool -- by 10 trillion yen ($119 billion) to 101 trillion yen, citing weakness in the global economy.
In Tokyo trade Friday, the dollar bought 83.93 yen, slipping from 84.38 yen in New York on Thursday, while the euro fetched 110.73 yen, from 111.72 yen.
The European currency was quoted at $1.3192, edging down from $1.3241.
The BoJ also said it would review its inflation goals, a key demand from incoming Prime Minister Shinzo Abe who has pushed for a two percent target in a bid to drag Japan out of years of deflation.
There has been tension between Abe, a former prime minister, and BoJ chief Masaaki Shirakawa, with the premier-in-waiting saying he wants to replace him with a more like-minded governor when his term ends in April.
But "the fact the lines of communication between (the pair) are evidently wide open encourages us in the view that the BoJ... is going to try to deliver much of what the new government is demanding," National Australia Bank (NAB) said in a note.
The dollar was holding up despite the Republican decision not to hold a vote on a back-up plan to extend tax cuts for all Americans earning less than $1 million even if a wider deal to avert the fiscal cliff could not be struck.
Divided US lawmakers are likely to head home for the holiday break without a deal on the package of spending cuts and tax hikes due to take effect at the start of January.
"People are telling themselves now it's going to go right to the wire," RBS Asia head of spot forex trading Jesper Bargmann told Dow Jones Newswires.
"But at the end of the day, people expect things to be solved."
The greenback won some support from official data that showed the US economy grew by 3.1 percent in the third quarter, faster than previously estimated, as separate figures pointed to strong homes sales in November.
The dollar was higher against other Asia-Pacific currencies.
It strengthened to 1,075.80 South Korean won from 1,073.60 won on Thursday, to 30.65 Thai baht from 30.63 baht, to 9,794 Indonesian rupiah from 9,744 rupiah and to Sg$1.2206 from Sg$1.2200.
The dollar gained to 41.12 Philippine pesos from 41.02 pesos, to 55.18 Indian rupees from 54.78 rupees and to Tw$29.05 from Tw$29.04.
The Australian dollar was lower at US$1.0452 from US$1.0481 while China's yuan bought 13.47 yen from 13.48 yen.